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LOS ANGELES — A tight state budget will likely limit raises for faculty and staff members in the University of California system and could lead to tuition increases to fund more competitive salaries, UC officials said Wednesday.

At the start of a two-day Board of Regents meeting at UCLA, system President Richard C. Atkinson said the budget proposed by Gov. Gray Davis keeps merit increases modest.

“The biggest disappointment ... is that we have not received funding for the kind of salary increases we would like to provide,” Atkinson said.

Board Chairwoman S. Sue Johnson said that will make it difficult to recruit top professors, and the solution may be raising student fees to increase revenue.

“We can’t jettison the quality of the institution,” she told the board.

The regents took no action but directed staff to press legislators to allocate as much funding as possible while considering the budget proposed by Davis.

In November, the regents approved a 2002-03 state-funded operating budget of $3.65 billion — an increase of 8.7 percent from last year. Included in the proposal was $125 million for merit raises and cost of living and parity adjustments.

The budget Davis submitted to the Legislature last week included $3.4 billion for the UC system, with $44.8 million for merit raises and no money for other wage increases.

The funding would provide an average merit increase of 1.5 percent for qualified faculty and staff members, according to figures provided by Larry Hershman, UC vice president for budget.

“For a few years, we’ll be facing some very tight budgets,” he said.

Though Davis slashed money requested for raises, he did pencil in nearly $64 million to fund enrollment growth of 7,100 full-time students. That amounts to a 4.3 percent increase over the 2001-02 allocation and was nearly equal to the amount requested by the board.

Davis asked the board to hold the line on tuition increases, as did several regents on Wednesday.

“If we can do without an increase in tuition, I would go for that,” said David S. Lee.

The regents meeting is scheduled to continue Thursday with a discussion and vote on a proposal that would allow undocumented immigrants and others who have graduated from a California high school after three years of attendance to pay in-state tuition.

Undocumented immigrants would have to file for legalized status to qualify.

Davis and the Legislature approved a bill last year implementing the plan at the California State University and community college systems.

Atkinson supports the measure as a way to align UC policies with those of other state systems, said Brad Hayward, a UC spokesman. However, the Board of Regents has yet to take a position.

On Wednesday, 300 students staged a boisterous demonstration in favor of the measure.

Waving signs reading “Knowledge not discrimination” and “Education is a human right,” they rallied for an hour outside the building while the regents ate lunch.

“The people most affected are the people who contribute the most because they are competitive and at the top of their class,’ said Vanessa Sifuentes, a member of MEChA, a Chicano student group that participated in the rally.